Value-added tax (VAT) is a tax on the consumption or use of goods and services in the Philippines. In some cases, the VAT rate may be set at zero percent, which is known as zero-rated VAT. This means that the goods or services are still subject to VAT, but the tax is not passed on to the customer.
If you are a service provider in the Philippines and provide services to foreign customers, your services may be eligible for zero-rated VAT. This applies to certain services such as BPO services, information technology services having their customers outside the Philippines , and certain services provided to foreign customers.
To charge zero-rated VAT on your services, you will need to apply for a VAT zero-rating certificate from the Philippine Bureau of Internal Revenue (BIR). This certificate will allow you to charge zero-rated VAT on your eligible services, and will also allow you to claim input VAT credits on your eligible purchases.
To apply for a VAT zero-rating certificate, you will need to provide the BIR with certain information, including your taxpayer identification number, your business registration documents, and proof of your eligibility for zero-rated VAT. Once your application is approved, you will receive a VAT zero-rating certificate that you can use to charge zero-rated VAT on your eligible services.
It is important to note that not all services are eligible for zero-rated VAT, and it is the responsibility of the business to determine whether or not their services are eligible. For more information on zero-rated VAT and how it applies to the sale of services to foreign customers, please contact us directly.